Compulsory Arbitration as Part of a BroaderEmployment Dispute Resolution Process: TheAnheuser-Busch Example

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Hofstra Labor and Employment Law Journal

Volume 26 | Issue 1 Article 12

2008

Compulsory Arbitration as Part of a Broader Employment Dispute Resolution Process: The Anheuser-Busch Example

Richard A. Bales Jason N.W. Plowman

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Recommended Citation

Bales, Richard A. and Plowman, Jason N.W. (2008) "Compulsory Arbitration as Part of a Broader Employment Dispute Resolution Process: The Anheuser-Busch Example," Hofstra Labor and Employment Law Journal: Vol. 26: Iss. 1, Article 12.

Available at:http://scholarlycommons.law.hofstra.edu/hlelj/vol26/iss1/12

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ARTICLES

COMPULSORY ARBITRATION AS PART OF A BROADER EMPLOYMENT DISPUTE

RESOLUTION PROCESS:

THE ANHEUSER-BUSCH EXAMPLE

Richard A. Bales* & Jason N. W. Plowman**

ABSTRACT

Federal and state reporters are filled with examples of lopsided arbitration agreements drafted by employers with the apparent intent of discouraging employees from successfully bringing valid claims. The case reporters contain far fewer examples of employment dispute resolution programs that are carefully designed to ensure that employees receive a fundamentally fair forum for the resolution of their employment disputes, for the obvious reason that employees are less likely to challenge these programs. Similarly, most scholarly commentary focuses on the overall merits and demerits of employment arbitration, or on problems posed by particular provisions often found in

. Professor of Law and Associate Dean of Faculty Development, Chase College of Law, Northern Kentucky University.

Associate, Foley & Lardner LLP; B.A. Political Science (2001), Miami University; J.D.

Candidate (2008), Washington University School of Law.

Both authors wish to acknowledge the help of Richard R. Ross, former Senior Associate General Counsel of Anheuser-Busch, and Susan Brueggemann, Director, Human Resources Service Center

& Dispute Resolution Program, for their invaluable help on this Article. The authors also wish to thank Gillian L.L. Lester for suggesting the topic, and Laura Rosenbury for her support of the project. The authors have received from Anheuser-Busch no payments or expense reimbursements of any kind related to work on this Article.

Bales and Plowman: Compulsory Arbitration as Part of a Broader Employment Dispute Re

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employment arbitration agreements, but not on employment dispute resolution programs that are designed with an eye toward employee fairness. Both the case law and the legal commentary, therefore, provide an arguably distorted picture of extant employment dispute resolution programs-from these perspectives, all the apples look rotten.

This Article begins from the premise that much can be learned from closely examining a well-drafted and well-implemented employment dispute resolution program. Such a program can (1) provide scrupulous employers with a model for drafting fair, ethical, and enforceable dispute resolution programs; (2) provide a benchmark to courts in their decisions of whether to enforce other employment dispute resolution programs;

and (3) serve as a reminder that not all the arbitral apples are rotten.

This Article examines in detail the Dispute Resolution Program of Anheuser-Busch, and finds that it is possible for an employment dispute resolution program culminating in binding arbitration simultaneously to serve (1) the employer's goal of containing employment litigation costs, (2) the employee's goal of access to a fair forum for resolving employment disputes, and (3) both parties' goal of promoting the non- adversarial resolution of employment disputes.

The findings of this Article are particularly important now that Congress appears increasingly likely to consider statutory amendments prohibiting pre-dispute employment arbitration agreements. This Article should not, however, be taken as a blanket endorsement of employment arbitration. We argue merely that employment arbitration can be fair to employees, not that employment arbitration is necessarily, or even usually, fair.

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COMPULSORY ARBITRATION

OUTLINE

I. INTRODUCTION

II. WHY ANHEUSER-BUSCH?

III. AN OVERVIEW OF ANHEUSER-BUSCH IV. THE ANHEUSER-BUSCH ADR PROGRAM

A. Development and Implementation B. An Overview of the DRP

C. The Three-Step Process

1. Local Management Review (Level One) 2. Non-Binding Mediation (Level Two) 3. Binding Arbitration (Level Three)

V. RESULTS

A. Outcomes Assessment

B. Follow-up and Future Challenges VI. ANALYSIS

VII. CONCLUSION

I. INTRODUCTION

Ever since arbitration of individual statutory employment claims exploded onto the scene in 1991,1 legal commentators have debated the merits and demerits of employment arbitration. Proponents, such as Samuel Estreicher, have argued that arbitration provides dispute resolution access to low- and middle-income employees who otherwise would not find legal representation and for whom judicial resolution therefore is not an option.² Critics, such as Katherine Van Wezel Stone, have argued that arbitration is a form of second-class justice, the modem equivalent of the yellow dog contract, particularly when employers foist lopsided agreements upon employees as a condition of employment.

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1. See RICHARD A. BALES, COMPULSORY ARBITRATION: THE GRAND EXPERIMENT IN EMPLOYMENT 1-2 (1997) (describing the early years of employment arbitration).

2. See Samuel Estreicher, Saturns for Rickshaws: The Stakes in the Debate Over Predispute Employment Arbitration Agreements, 16 OHIO ST. J. ON DIsP. RESOL. 559, 563-64 (2001).

3. See Katherine Van Wezel Stone, Mandatory Arbitration of Individual Employment Rights: The Yellow Dog Contract of the 1990s, 73 DENY. U. L. REV. 1017, 1020 (1996) [hereinafter 2008]

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Federal and state case reporters are filled with examples of lopsided employment arbitration agreements. Examples include agreements that waive the employee's right to recover punitive damages⁴and attorneys' fees,⁵cap the amount of consequential damages well below the amount permitted by statute, impose shortened statutes of limitation,' impose filing fees and other prohibitive costs on would-be claimants, require employees and consumers to submit their claims to arbitration while leaving the company free to litigate,⁹forbid class actions,¹⁰restrict or eliminate discovery," and give the company unilateral authority to appoint arbitrators.¹²

The case reporters contain far fewer examples of employment dispute resolution programs (often culminating in binding arbitration) that are carefully designed to ensure that employees receive a fundamentally fair forum for the resolution of their employment disputes.¹³ This is partly for the obvious reason that employees are less likely to challenge these programs, and partly because when a dispute resolution program is challenged the judicial focus is not on the "fair"

parts of the program, but on the questionable parts that may render the program unenforceable. ¹⁴ Similarly, most scholarly commentary focuses

Mandatory Arbitration]; Katherine Van Wezel Stone, Rustic Justice: Community and Coercion Under the Federal Arbitration Act, 77 N.C. L. REV. 931,960 (1999) [hereinafter Rustic Justice].

4. See, e.g., Alexander v. Anthony Int'l, L.P., 341 F.3d 256, 267, 271 (3d Cir. 2003) (striking arbitration agreement that, among other things, limited damages to reinstatement and "net pecuniary damages").

5. See, e.g., Graham Oil Co. v. Arco Prods. Co., 43 F.3d 1244, 1247 (9th Cir. 1994).

6. See, e.g., Morrison v. Circuit City Stores, Inc., 317 F.3d 646, 670-71 (6th Cir. 2003) (en bane) (agreement imposed a one-year cap on back pay, a two-year cap on front pay, and a $5000 cap on punitive damages in most cases); Pellow v. Daimler Chrysler Servs. N. Am., LLC., No. 05- 73815, 2006 WL 2540947, at *8 n.7 (E.D. Mich. Aug. 31, 2006).

7. See, e.g., Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1175 (9th Cir. 2003);

Alexander, 341 F.3d at 266-67 (striking arbitration provision that, among other things, required employees to notify the employer "within thirty days of the event providing the basis of the claims"); Conway v. Stryker Med. Div., No. 4:05-CV-40, 2006 WL 1008670, at *1 (W.D. Mich.

Apr. 18, 2006).

8. See, e.g., Ingle, 328 F.3d at 1177.

9. See, e.g., Armendariz v. Found. Health Psychcare Servs., Inc., 6 P.3d 669, 675 (Cal.

2000).

10. See, e.g., Gentry v. Superior Court, 165 P.3d 556, 560 (Cal. 2007).

II. See, e.g., Ferguson v. Countrywide Credit Indus., Inc., 298 F.3d 778, 786-87 (9th Cir.

2002).

12. See, e.g., Hooters of Am., Inc. v. Phillips, 173 F.3d 933, 938-39 (4th Cir. 1999).

13. A sampling of cases from various state and federal reports, concerning employment dispute resolution programs, yield few results. See. e.g., id. at 935-41; Armendariz, 6 P.3d at 694.

14. See Interview by Peter Phillips with Richard R. Ross, Senior Assoc. Gen. Counsel, Anheuser-Busch Cos. (January 3, 2002) in CPR INSTIT. FOR DISPUTE RESOLUTION, How Companies Manage Employment Disputes: A Compendium of Leading Corporate Employment [Vol. 26:1

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on the overall merits and demerits of employment arbitration, or on problems posed by particular provisions often found in employment arbitration agreements, but not on employment dispute resolution programs that are designed with an eye toward employee fairness.¹⁵ Both the case law and the legal commentary, therefore, provide an arguably distorted picture of extant employment dispute resolution programs-from a worm's-eye view, all the apples look rotten.

This Article begins from the premise that much can be learned from closely examining a well-drafted and well-implemented employment dispute resolution program. Such a program can provide scrupulous employers with a model for drafting fair, ethical, and enforceable dispute resolution programs.¹⁶It also can provide a benchmark to courts in their decisions of whether to enforce other employment dispute resolution programs. Finally, it can serve as a reminder that not all the arbitral apples are rotten. Ultimately, the purpose of this Article is to assess whether an employment dispute resolution program culminating in binding arbitration can simultaneously (1) serve the employer's goal of containing employment litigation costs, (2) serve the employee's goal of access to a fair forum for resolving employment disputes, and (3) serve both parties' goal of promoting the non-adversarial resolution of employment disputes.

II. WHY ANHEUSER-BUSCH?

In 2002, Richard R. Ross, Senior Associate General Counsel of Anheuser-Busch, was interviewed in a book published by the International Institute for Conflict Prevention & Resolution ("CPR") for his role in creating the Anheuser-Busch Dispute Resolution Program ("DRP").1⁷Ross stated:

The enforceability of these programs will always be an issue. My

Programs app. at 55 (2002).

15. See, e.g., Estreicher, supra note 2, at 560, 563 (focusing on policy debates that influence the Justices in making their decisions in employment arbitration litigation); Mandatory Arbitration, supra note 3, at 1017-18 (giving an example of how employers impose control over employees by requiring their acceptance of a biased arbitration agreement as a requisite part of employment).

16. The word "fair" is used throughout this piece to assess dispute resolution programs. We use the word as an excluder that encompasses all the things we mean by unfair, bad faith, no cause, and the like. When we say "fair," we use that as shorthand to say that a dispute resolution program does not contain any of the procedures that courts repeatedly have identified as unfair, such as no

discovery, high fees, a biased pool of arbitrators, and the like.

17. Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 49.

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philosophy on that is first, you cannot play games with these programs.

If you try to use an employment ADR program to limit legal exposure or employee rights or remedies, you are going to get shot down.

Second, no matter how fair and reasonable the program, there will always be some risk that a particular court will not enforce it....

Besides, the true key to a good employment ADR program is not legal enforceability. The key to a good program is whether it has sufficient credibility in the eyes of the employees that they willingly use it. If you can get your program to that level, you don't have to worry about enforceability.^{1 8}

Ross's approach to the DRP thus appeared to be consistent with the approach that one of the authors of this Article has been advocating for several years: employers adopting employment arbitration programs should "bend over backwards to formulate fair employment arbitration procedures."^{'1 9}

In spring 2007, at a conference hosted by the National Academy of Arbitrators and the Chicago-Kent College of Law Institute for Law and the Workplace,^{2 °}the same author of this Article met several mediators and arbitrators who had worked on cases originating from the Anheuser- Busch DRP. The mediators and arbitrators uniformly described Anheuser-Busch as going the extra mile to ensure that employees received both procedural fairness and reasonable substantive outcomes.

This anecdotal evidence seemed to indicate that the Anheuser-Busch DRP tended to be fair to employees, not only on paper, but also in practice.

Of course, a handful of anecdotal reports cannot serve as the basis for concluding that the Anheuser-Busch DRP yields procedural and substantive justice in every case, or even that it does so more often than the civil litigation it is designed to replace. However, these reports, together with the ADR philosophy of the General Counsel responsible for implementing and administering the DRP, led the authors to conclude that the Anheuser-Busch DRP likely would be one of the more pro-employee extant employment dispute resolution programs.

18. Id. app. at 55.

19. See, e.g., Rick Bales & Reagan Burch, The Future of Employment Arbitration in the Nonunion Sector, 45 LAB. L.J. 627, 634 (1994).

20. Editor's Note, Papers from the National Academy ofArbitrators Conference, "Beyond the Protocol: The Future of Due Process in Workplace Dispute Resolution, " 11 EMP. RTS. & EMP.

POL'Y J. 255, 255 (2007).

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Our goal in this Article is modest. We have not attempted empirically to compare outcomes in cases arising under the Anheuser- Busch DRP to litigated cases generally² or to outcomes arising under other dispute resolution programs in an effort to ascertain whether the DRP results in substantive justice. Nor have we surveyed Anheuser- Busch employees (or former employees) who have participated in dispute resolution under the DRP to ascertain their subjective perceptions of procedural and substantive fairness. Instead, our goal is to describe the Anheuser-Busch DRP, evaluate it for procedural fairness to employees, and to answer the question of whether it is possible for an employer to achieve the legitimate goals of a dispute resolution program (such as enhanced employee relations and decreased fees paid to attorneys for litigation) by implementing a dispute resolution program containing reasonably fair dispute resolution procedures.

III. AN OVERVIEW OF ANHEUSER-BUSCH

The creation of Anheuser-Busch can be traced to the Bavarian Brewery which was founded in 1852 in St. Louis, and was subsequently purchased by Eberhard Anheuser in 1860, establishing E. Anheuser &

Co.²²Four years later, Anheuser's son-in-law, Adolphus Busch, became a part of the business that would eventually be called Anheuser-Busch.^{2 3} The company's flagship brand, Budweiser, was pioneered in 1876.24 Today, Budweiser and its counterpart, Bud Light, are "the two best- selling beers in the world.^''25 Moreover, the company maintains a nearly 50 percent market share of the U.S. beer market.²⁶

21. For a thorough discussion of why efforts to do so amount to comparing apples with oranges, see Richard A. Bales, Normative Consideration of Employment Arbitration at Gilmer's Quinceafiera, 81 TUL. L. REV. 331, 347-49 (2006).

22. Anheuser-Busch Companies: History, http://www.anheuser-busch.com/History.html (last visited Oct. 13, 2008). Adolphus Busch came to St. Louis as an immigrant from Germany in 1857.

Id.

23. Id.

24. Id.

25. Id.

26. ANHEUSER-BUSCH Cos., 2006 ANNUAL REPORT 2 (2006) [hereinafter 2006 ANNUAL REPORT], available at http://anheuserbusch.com/pdf/2006ARAnheuserBusch.pdf. The company currently retains a 48.4 percent share of the U.S. beer market. Id. at 2, 9. This market share is more than twice as much as that of its nearest competitor on the domestic front. Id. at 9. Moreover, the company "leads sales in all major U.S. beer categories: premium, premium light, specialty, popular, value and nonalcohol." ANHEUSER-BUSCH Cos., THIS Is ANHEUSER-BUSCH 3 (2007) [hereinafter THIS Is ANHEUSER-BUSCH], available at http://www.anheuserbusch.com/PDF/ABQuickGuide2.pdf.

Since 1957, the company has been the forerunner in the U.S. beer industry. Id. at 24.

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The Anheuser-Busch Companies continue to be headquartered in St. Louis²⁷and are currently comprised of three primary business units:

Beer and Beer-Related, Packaging, and Entertainment.²⁸ Beer and beer- related operations is "[t]he company's principal subsidiary[,].

[p]roduc[ing] more than 90 beers, flavored alcoholic beverage and nonalcoholic brews at 12 breweries in the United States and 15 around the world .... In addition to Budweiser and Bud Light, the company produces such well-known brands as Michelob, Busch, Rolling Rock, and Bacardi Silver.³⁰ In total, the company produces beverages across eleven major groups: Budweiser Family, Michelob Family, Imports, Specialty Beers, Busch Family, Natural Family, Malt Liquors, Seasonal Beers, Specialty Malt Beverages, Specialty Organic Beers, and Alliance Partner Products.³'

In addition to its beer unit, the company also operates significant packaging operations, supporting the packaging needs related to beer production.³² By providing its own packaging materials such as cans, bottles, and labels, "the company [is able] to manage the supply, cost, and quality of its packaging.^{3 3} Finally, the company is a leading operator of amusement parks in the United States, U.S. theme park operators running nine family entertainment parks, including Sea World and Busch Gardens.³⁴ Annually, the Busch theme parks receive well over 22 million visitors.³^' The net result of its business operations has placed Anheuser-Busch at the top of Fortune's industry rankings in the

27. 2006 ANNUAL REPORT, supra note 26, at 68.

28. THIS IS ANHEUSER-BUSCH, supra note 26, at 24-25.

29. Id. at 24. The beer-related operations include agricultural operations, barley elevators/contracting offices, hop farms, hop contracting offices, nutri-turf operations, malt plants, rice mills, seed facilities, research centers, barley offices, refrigerated car companies, and railway companies. Id. at 25.

30. Anheuser-Busch Companies: Beer, http://www.anheuser-busch.com/BeerVerified.html (last visited Oct. 13, 2008) [hereinafter Beer].

31. Id. For a complete list of the brands produced by Anheuser-Busch, see id.

32. THIS IS ANHEUSER-BUSCH, supra note 26, at 10, 25. The packaging division includes a metal container corporation, can plants, lid plants, a recycling corporation, a recycling facility, a printing and packing corporation, a label plant, liner plants, a glass corporation, and a bottle plant.

Id. at 25.

33. Id. at 10.

34. Id. at 25. The company's theme parks include two locations of Busch Gardens, three locations of Sea World, Sesame Place, Aquatica, and Discovery Cove. Id. "Sea World, Busch Gardens, and Discovery Cove care for the largest zoological collection in the world." 2006 ANNUAL REPORT, supra note 26, at 22. In addition, within the entertainment business unit, the company "[o]perates resort, residential, and commercial properties," as well as real estate developments. THIS IS ANHEUSER-BUSCH, supra note 26, at 25.

35. THIS IS ANHEUSER-BUSCH, supra note 26, at 13.

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Beverages category of both America's Most Admired Companies, as well as the magazine's list of the World's Most Admired Companies.³⁶

Throughout its U.S.-based operations, Anheuser-Busch employs roughly 45,000 employees.³⁷ The company has an estimated 8,600 salaried employees, 9,400 union employees, 6,400 non-union hourly employees, and 20,000 temporary/seasonal workers.^{3 8} Among its three business units, the workforce of Anheuser-Busch is both nationwide and

global in terms of distribution of employees.³⁹

IV. THE ANHEUSER-BUSCH ADR PROGRAM

The Anheuser-Busch Companies (the "company") currently run one of the most extensive and well-developed programs for the non- judicial resolution of employment disputes.⁴⁰ The Dispute Resolution Program (the "program" or "DRP") combines binding arbitration with a comprehensive dispute resolution process, focusing on early resolution, fairness, and open communication.⁴¹ During its ten years of existence, the program has been very successful at both early resolutions of problems as well as reducing the company's outside legal fees. 42 In doing so, Anheuser-Busch's program demonstrates that compulsory

36. America's Most Admired Companies, FORTUNE, reprinted in FORTUNE Excerpt:

America's Most Admired Companies (Mar. 17, 2008), http://www.anheuser-busch.com/PDF/4-16- 08ab.com.pdf (last visited Oct. 21, 2008); World's Most Admired Companies, FORTUNE, reprinted in FORTUNE Excerpt: World's Most Admired Companies (Mar. 17, 2008), http://www.anheuser- busch.com/PDF/4-16-08ab.com.pdf (last visited Oct. 21, 2008). The industry rankings were derived by averaging each company's score on nine important attributes: innovation, people management, use of corporate assets, social responsibility, quality of management, financial soundness, long-term investment, quality of products/services, and globalness. Id. The company was ranked first in eight out of these nine categories. Id.

37. Telephone Interview with Richard R. Ross, Senior Assoc. Gen. Counsel, Anheuser-Busch Cos., & Susan Brueggemann, Dir., Human Res. Serv. Ctr. & Dispute Resolution Program, Anheuser-Busch Cos.(Sept. 5, 2007) [hereinafter Telephone Interview with Richard R. Ross &

Susan Brueggemann].

38. Id. The majority of those employees classified as seasonal/temporary work at one of the company's nine parks. Id. As of December 31, 2006, Anheuser-Busch employed a total of 30,183 individuals on a full-time basis. 2006 ANNUAL REPORT, supra note 26, at 34.

39. See THIS iS ANHEUSER-BUSCH, supra note 26, at 25.

40. See ANHEUSER-BUSCH COS., DISPUTE RESOLUTION PROGRAM GUIDE 1 (1997) [hereinafter ORIGINAL DRP GUIDE] (on file with authors).

41. Id.

42. Interview with Richard R. Ross, Senior Assoc. Gen. Counsel, Anheuser-Busch Cos., in St.

Louis, Mo. (Aug. 14, 2007); Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 51. The program was rolled out in phases, beginning with the entertainment subsidiary in August 1997 and finishing with the corporate headquarters in August 1999. Interview with Richard R.

Ross, supra note 42.

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arbitration and employee fairness do not have to be mutually exclusive.

A. Development and Implementation

Several factors combined to lead the company to begin investigating the possibility of creating a workplace ADR program.

First, the company sought to open the lines of communication between employees and management in order to resolve workplace disputes.⁴³ This goal emerged from a lawsuit in which the company identified the lack of any effective mechanism for employees to approach management with concerns.⁴ Lacking such a process, the company was left in a situation of potentially first learning of a conflict when a lawsuit was filed or the conflict was otherwise unnecessarily protracted.⁴⁵

Second, the company also sought to reduce its legal expenses.46

Because of its size alone, the company was forced to devote an enormous amount of time and money to litigation.^{4 7} This investment was required to be in place whether or not a lawsuit actually resulted or not.^{4 8} That is, the anticipation of litigation alone prompted significant spending on the part of the company.⁴⁹ A program that would allow for fair adjudication of employee conflicts, while also allowing for a reduction of the legal budget, therefore, would be extremely beneficial to the company.

Third, and perhaps a consideration growing out of the first two goals, the company sought quick and fair resolution of employee disputes-i.e., a dispute resolution process that would allow conflicts to be resolved in a manner more efficiently and quickly than litigation.^{5 °} These concerns ultimately prompted the company to begin researching the possibility of a workplace ADR program.⁵¹

43. Interview with Richard R. Ross, supra note 42; Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 49.

44. Interview with Richard R. Ross, supra note 42; Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 49.

45. Interview with Richard R. Ross, supra note 42; see Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 49.

46. Interview with Richard R. Ross, supra note 42; see Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 51.

47. Interview with Richard R. Ross, supra note 42.

48. Id.

49. Id.

50. Id.; see also Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 49 (discussing some of the company's considerations which led to the development of its Dispute Resolution Program).

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In late 1996, Senior Associate General Counsel Richard R. Ross began investigating the possibility of implementing an ADR program by first benchmarking other companies currently operating such programs. 52 His research resulted in proposals to the company's management committee, as well as the Board of Directors, by the end of

1996.⁵³ Ross then spent the better half of 1997 reviewing the case law to confirm the viability of such a program.⁵⁴ As the case law developed, Ross realized that a correctly designed ADR program "could be a [great]

opportunity for both employees and employers. ⁵⁵

In developing the program, Ross partnered with Human Resources from the outset.⁵⁶ Focus groups were also assembled with employees, as well as meetings with a number of company executives, managers, and supervisors.^{5 7} Throughout the development process, the goal was to gain a sense of what would work within the company's corporate culture, and where potential sources of resistance existed.⁵⁸ Ultimately, the design of the program sought to accommodate the needs of each business unit with respect to addressing employee problems.^{5 9} In doing

so, the company did not retain any outside resources, but did consult at

R. Ross, supra note 14, app. at 49.

52. Interview with Richard R. Ross, supra note 42; Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 50. Based on this research, Ross concluded that most of these companies were generally pleased with the results, and were not meeting significant opposition from employees or seeing a rise in frivolous complaints. Interview with Richard R. Ross, supra note 42; Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 50.

53. Interview with Richard R. Ross, supra note 42; Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 49. The backing of senior management and the Board would be of significance as the program was rolled out. Interview with Richard R. Ross, supra note 42;

Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 49.

54. Interview with Richard R. Ross, supra note 42; Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 50.

55. Interview with Richard R. Ross, supra note 42; Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 50. In large part, the Supreme Court's opinion in Gilmer v.

Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), was the defining moment for Ross. Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 50. In Gilmer, the Court held for the first time that pre-dispute arbitration agreements between employers and employees in the non- union setting were enforceable, despite the statutory discrimination rights at issue. Gilmer, 500 U.S.

at 35. For a more detailed examination of the progression of case law handling employment arbitration programs, see Bales, supra note 21, at 335-40.

56. Interview with Richard R. Ross, supra note 42; Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 50.

57. Interview with Richard R. Ross, supra note 42; Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 50.

58. Interview with Richard R. Ross, supra note 42; Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 50.

59. Interview with Richard R. Ross, supra note 42; Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 50-5 1.

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times with ADR organizations and outside counsel.⁶⁰ The development and implementation of the program chiefly from within the company resulted in minimal start-up ^costs. ^{6 1}

B. An Overview of the DRP

Anheuser-Busch finalized its program in 1997 and implemented the program through a phased roll-out beginning with its entertainment subsidiary in August 1997.62 The program applies to all salaried and non-union hourly employees of the Anheuser-Busch companies, and any of its U.S. subsidiaries.⁶³ The company invested significant time in rolling out the program, visiting almost all business sites, meeting with employees, reviewing the program, answering questions, and meeting with managers. 64 Significant efforts were concentrated on managers

60. Interview with Richard R. Ross, supra note 42; Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 51. The company's outside litigation counsel was asked to review the program for observations and suggestions. Interview with Richard R. Ross, supra note 42;

Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 51. CPR and AAA were also useful resources, supplying "written materials and also putting [the company] in touch with [other] companies that had already implemented employment ADR programs." Interview with Richard R. Ross, supra note 42; Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 5 1. The company looked at Brown & Root, which, at the time, was operating a program that was "ahead of the curve." Telephone Interview with Richard R. Ross & Susan Brueggemann, supra note 37. Among the unique characteristics of the Brown & Root program was the provision of attorney fees. For a detailed examination of the Brown & Root program, see BALES, COMPULSORY ARBITATION, supra note 1, at 102-44. The company also looked at TRW and J.C. Penney.

Telephone Interview with Richard R. Ross & Susan Brueggemann, supra note 37. The TRW program included mandatory arbitrations but voluntary consequences. Id. Ultimately, the company hoped to pick the best elements from the currently existing programs and mesh those characteristics into its program. Id. The company also relied on EEAC, an organization of major corporations, which ultimately formed a subgroup that served as a resource. Id.

61. Interview with Richard R. Ross, supra note 42; Interview by Peter Phillips with Richard R. Ross, supra note 14, app. at 51.

62. Interview with Richard R. Ross, supra note 42.

63. Id. Coverage of the program includes roughly 8,600 salaried employees in the United States, 6,400 active non-union hourly employees, and 20,000 temporary employees (mostly employed at theme parks). Interview with Richard R. Ross & Susan Brueggemann, supra note 37.

The program does not cover approximately 9,400 union employees. Id. The program covers only U.S. employees. Id. Ross believes the program will not expand to include foreign employees, based primarily on the legal differences abroad. Interview with Richard R. Ross, supra note 42.

The several Asian and European counties in which the company operates tend to have administrative bodies that handle employment disputes. Id. In addition, damages are typically set by law and limited and the process moves much quicker. Id. The result of these differences is a lack of need for such a program abroad. Id. A covered employee who is terminated is also subject to resolving any disputes through DRP. ANHEUSER-BUSCH COS., DISPUTE RESOLUTION PROGRAM POLICY 23 (2d ed. 2003) [hereinafter CURRENT DRP POLICY] (on file with authors).

64. Interview with Richard R. Ross, supra note 42. Ross estimated that both the legal [Vol. 26:1

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because of their critical role in implementing the new program.^{6 5}

The initial roll-out of the program also included three publications-a program guide, a policy statement, and a highlights brochure.⁶⁶ Within these materials, both a flow chart of the DRP was included, as well as a section containing "Questions and Answers for Employees.^''67 Throughout these materials, a clear and consistent message was delivered. A letter from Vice President-Corporate Human Resources, William L. Rammes, explained to employees:

The company supports a workplace atmosphere that encourages employees to speak up about problems and seek solutions to them....

DRP is intended to enable employees to more freely and effectively express their concerns and seek resolution of workplace problems....

[W]e believe that the DRP process can enhance problem resolution in a simple, fair, timely and economical way, which is in all of our best interests ⁶⁸

The materials also highlighted the benefits of the program, including simplicity, quick resolution, economy, and the availability of full remedies.⁶⁹ The significant time and energy dedicated to the program roll-out focused on creating buy-in from employees and managers alike, while also building the program's credibility.^{7 °}

department and the program administrators conducted face-to-face, open meetings with ninety percent of employees. Interview with Richard R. Ross & Susan Brueggemann, supra note 37. This took the form of both a presentation as well answering any employee questions. Id.

65. Interview with Richard R. Ross, supra note 42. Because the great majority of disputes are to be resolved in Level One, managers were put in a new role of problem solver. Id. This specific task to having to address employee problems created a new experience for many managers, a process the company viewed as an ongoing process, centered primarily on common sense. 1d.

66. ANHEUSER-BUSCH Cos., DISPUTE RESOLUTION PROGRAM (DRP) POLICY STATEMENT (1997) [hereinafter ORIGINAL DRP POLICY] (on file with authors); ANHEUSER-BUSCH COS., DISPUTE RESOLUTION PROGRAM HIGHLIGHTS (1997) [hereinafter HIGHLIGHTS] (on file with authors); ORIGINAL DRP GUIDE, supra note 40.

67. ORIGINAL DRP GUIDE, supra note 40, at 8-12; see also CURRENT DRP POLICY, supra note 63, at 19-23 (containing a more current version of the flow chart and the "Questions and Answers for Employees" section). For a complete list of the questions answered, see infra note 153 and accompanying text.

68. ORIGINAL DRP GUIDE, supra note 40, at 1.

69. HIGHLIGHTS, supra note 66; ORIGINAL DRP GUIDE, supra note 40, at 2.

70. Interview with Richard R. Ross, supra note 42. Ross noted that he believed marketing was one of the most important elements of a successful employment ADR program. Id. In fact, he viewed the biggest deficiency of many other programs as being designed by outside counsel with a

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Following the program's initial implementation, new employees now receive DRP training as part of new hire orientation, including a presentation and question and answer session, similar to the initial roll- out meetings.⁷¹ In addition, management teams are provided periodic

"refresher" trainings. ²

The materials also delivered the consistent message that covered employees must use the program to resolve workplace disputes and that by remaining employed with the company, "employees agree, as a condition of employment, that all covered claims are subject to the [program]., ⁷³ Finally, the materials reinforced that the at-will employment relationship continued to exist.⁷⁴ The company reserves the right to alter or terminate the program at any time by giving thirty days' notice, at which point both the company and employees remain obligated to "complete the processing of any dispute pending in DRP at the time of the announced change. ⁷⁵

The current program covers all types of employment disputes.⁷⁶ In fact, employees may submit any employment dispute to the program for

view toward legal enforceability, rather than focusing on credibility. Id.

71. Interview with Richard R. Ross & Susan Bmeggemann, supra note 37.

72. Id.

73. E.g., HIGHLIGHTS, supra note 66 ("After the effective date, covered employees must use the Dispute Resolution Program to resolve workplace disputes. By accepting an offer of employment or by continuing employment with any Anheuser-Busch company on or after the effective date of the DRP, new or current employees agree, as a condition of employment, that all covered claims are subject to the DRP."); see also CURRENT DRP POLICY, supra note 63, at 1 ("THIS POLICY CONSTITUTES A BINDING AGREEMENT BETWEEN YOU AND THE COMPANY FOR THE RESOLUTION OF EMPLOYMENT DISPUTES. By continuing your employment with Anheuser-Busch Companies, Inc. or any of its subsidiary companies ("Company"), you and the Company are agreeing as a condition of your employment to submit all covered claims to the Anheuser-Busch Dispute Resolution Program ("DRP"), to waive all rights to a trial before a jury on such claims, and to accept an arbitrator's decision as to the final, binding and exclusive determination of all covered claims.").

74. ORIGINAL DRP POLICY, supra note 66, at 1 ("[T]his procedure does not change the employment at-will relationship between the company and its employees."); see also CURRENT DRP POLICY, supra note 63, at I ("This program does not change the employment-at-will relationship between you and the Company."). Some have argued that an employer amending the at-will relationship in any way risks converting the relationship to a just-cause relationship. See, e.g., Stephen L. Hayford & Michael J. Evers, The Interaction Between the Employment-At- Will Doctrine and Employer-Employee Agreements to Arbitrate Statutory Fair Employment Practices Claims: Difficult Choicesfor At- Will Employers, 73 N.C.L. REv. 443, 481 (1995).

75. CURRENT DRP POLICY, supra note 63, at 3. To date, the program has had almost no modification. Telephone Interview with Richard R. Ross & Susan Brueggemann, supra note 37.

The only modifications occurred in December, 2003 which further addressed administrative issues (timing issues and additional explanations) but provided no substantive changes regarding rights or remedies. Id.

76. CURRENT DRP POLICY, supra note 63, at 5.

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Level One resolution.⁷⁷ The program allows covered claims to proceed to Level Two and Level Three. Such disputes are: those that "the [c]ompany may have against an employee," or those that "the [e]mployee may have against the [c]ompany and/or an individual employee. ^{. .} acting within the scope of . . .employment with the [c]ompany, where the [e]mployee alleges unlawful termination and/or unlawful or illegal conduct on the part of the [c]ompany. ^'79The current DRP policy specifically enumerates a number of examples of covered claims, including claims associated with involuntary terminations, discrimination, retaliation, workplace accommodation, breach of a duty of loyalty or fiduciary duty, breach of employment contracts or covenants, promissory estoppel, tort claims, and violation of public policy.⁸⁰ The policy also lists those claims excluded from the program's coverage, including ERISA, workers' compensation, intellectual property, NLRA, claims outside the scope of an individual's employment, and "[c]laims that seek to establish, modify or object to the Company's policies or procedures, except claims ... of discriminatory application."⁸¹

The program's policies contain a number of technical elements that bring it into compliance with relevant legal restrictions.^{8 2} For example, the program makes clear that employees are still free to contact the EEOC and other govemment agencies.^{8 3} The program also provides language relevant to coverage under the Federal Arbitration Act.⁴

77. Id. at 5; see infra notes 90-95 and accompanying text regarding the level classification of the DRP.

78. CURRENT DRP POLICY, supra note 63, at 5.

79. Id.

80. Id.

81. Id. The majority of claims excluded are handled by pre-existing internal procedures that prevent such claims from entering the program. Telephone Interview Richard R. Ross & Susan Brueggemann, supra note 37. Many programs existing prior to the Anheuser-Busch program excluded intellectual property claims. Id. DRP also excludes intellectual property claims, based primarily on the need for injunctive relief, such as a temporary restraining order. Id.

82. See infra notes 83-86 and accompanying text.

83. CURRENT DRP POLICY, supra note 63, at 3 ("Nothing in this program is intended to discourage or interfere with the legally protected rights of Employees to file administrative claims or charges with government agencies. Such agencies include, but are not limited to, the Equal Employment Opportunity Commission (EEOC), the Office of Federal Contract Compliance Programs (OFCCP), and related state fair-employment agencies."). The program does provide that,

"if an Employee files a charge with the EEOC, OFCCP, or with a state fair-employment agency, the Company may request the agency to defer its processing of the charge until the Employee and the Company complete the DRP." Id.

84. 9 U.S.C. §§ 1-16 (2006); CURRENT DRP POLICY, supra note 63, at 6 ("This program constitutes a written agreement to arbitrate pursuant to the Federal Arbitration Act, 9 U.S.C.A.

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Language is also included that reinforces the applicability of the program in the face of judicial challenges.^{8 5} Finally, from a logistical standpoint, the program established the position of DRP Administrator within the company.⁸⁶

The Anheuser-Busch DRP builds off previous successful programs by going beyond the standard arbitration agreement used by many other employers instituting compulsory arbitration programs.⁸⁷ The goal of the program is a timely and effective resolution to workplace disputes.⁸⁸ The company acknowledges that workplace disputes occur, but an

Sections 1-14. The parties acknowledge that the Company is engaged in transactions involving interstate commerce and Employees eligible to participate in the DRP are not employed by the Company as seamen, railroad employees, or other class of worker engaged in foreign or interstate commerce.").

85. CURRENT DRP POLICY, supra note 63, at 6 ("If a court of competent jurisdiction determines that the DRP is not the exclusive, final and binding method for the Company and its Employees to resolve disputes, and/or that the decision and award of the arbitrator is not final and binding as to some or all of the claim(s) in dispute, the Company and the Employee agree that they will first use the DRP for any covered claims before filing or pursuing any legal, equitable, administrative or other formal proceeding. If a court determines that any provision of the DRP is invalid or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected by the determination and each remaining provision of the DRP shall be valid, legal and enforceable to the fullest extent permitted by law.").

86. Id. at 3. The Administrator position is responsible for:

1. Coordinat[ing] the receipt of [e]mployee disputes with managers and HR representatives;

2. Answer[ing] questions about the [program];

3. Monitor[ing] compliance with and requests for extensions of all time limits for submission of claims;

4. Coordinat[ing] the scheduling of mediation and arbitration..., 5. Schedul[ing] training sessions for [e]mployees and managers;

6. Schedul[ing] the [c]ompany's participation in pre-arbitration communications with arbitrators and [e]mployees regarding . . .discovery [requests];

7. Work[ing] with [c]ompany representatives, [e]mployees, and their attorneys, to select and schedule mediators and arbitrators;

8. Administer[ing] and interpret[ing] the terms and conditions of the [program] ...

9. [Serving] as the [c]ompany administrative liaison with the [organization of professional mediators or arbitrators (such as AAA)]; and

10. Attend[ing] mediations and arbitration hearings.

Id. at 3-4. Currently, the Administrator position is supported by a Coordinator position. Telephone Interview Richard R. Ross & Susan Brueggemann, supra note 37. The travel time involved with the Administrator position depends on the volume of claims. Id. The position currently does not travel to mediations and arbitrations in which inside or outside counsel is representing the company, but does attend all proceedings with pro se parties. Id. The company has maintained the Administrator position as a neutral, with an interest in resolution. Id. In doing so, a vice president or other manager will serve as the company's representative in the DRP process. Id. The Administrator's decision making power starts and stops in deciding whether a claim is eligible for participation in the DRP. Id.

87. Telephone Interview with Richard R. Ross & Susan Brueggemann, supra note 37.

88. See supra note 68-69 and accompanying text.

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overriding interest of all involved parties is "resolving these disputes expeditiously and fairly."⁸⁹ In the most succinct description, the brochure highlighting the program explains that, "[t]he purpose of the DRP is to enable employees to more freely and effectively express their concerns and seek resolution of workplace problems through a process that emphasizes fairness and due process while minimizing bureaucracy."⁹⁰

To this end, Anheuser-Busch has developed a three-step process for the resolution of employment disputes after informal efforts do not resolve an employee's dispute.⁹¹ Level One, Local Management Review, is an attempt to settle the dispute involving the employee and management team, the procedures of which are designed to suit the needs of each business unit.⁹² If the employee is not pleased with the results, the employee may pursue a covered claim at Level Two with mediation.⁹³ If, at Level Two, a resolution is not achieved, the employee may then seek binding arbitration at Level Three.⁹⁴ Employees are required to "complete each level of the process before proceeding to the next level."⁹⁵ Throughout the program, retaliation is prohibited "against anyone who submits a dispute to the [program], or who participates as witness or otherwise in the DRP process. ^{9 6}

C. The Three-Step Process

1. Local Management Review (Level One)

Level One of the DRP involves "Local Management Review," the

89. ORIGINAL DRP GUIDE, supra note 40, at 1.

90. HIGHLIGHTS, supra note 66.

91. CURRENT DRP POLICY, supra note 63, at 2. The program provides: "Employees are encouraged to resolve work-related disputes informally through dialogue with their managers, a Human Resources (HR) representative, or the Anheuser-Busch Personnel Communications department. However, when informal efforts do not resolve an Employee's dispute, and the Employee wishes to pursue the matter further, an Employee must submit his or her dispute to the DRP." Id.

92. Id.

93. Id.; see supra text accompanying note 80 for a discussion of covered claims.

94. CURRENT DRP POLICY, supra note 63, at 2.

95. Id.

96. Id. at 6. Both Ross and the Dispute Resolution Program Administrator, Susan Brueggemann, explained that retaliation has been a non-issue in the program. Telephone Interview Richard R. Ross & Susan Brueggemann, supra note 37. Ross explained that the company closely guards the integrity of the program and has stopped any effort to retaliate at the earliest stages. Id.

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procedures for which change based upon what is required for the

"individual subsidiary or business unit.,^{9 7} The common element of a Level One dispute, however, is the submission of a DRP Notice of Dispute form⁹⁸to the local Human Resources representative.⁹" The form is one page and includes basic personal information and a description of the dispute.⁰⁰ There are no time limits for an employee to submit disputes to Level One.'⁰' However, if an employee intends to submit a covered claim to Levels Two or Three, the employee must submit the dispute to Level One within the applicable time limitation.^{1 0 2}

2. Non-Binding Mediation (Level Two)

Level Two, involving nonbinding mediation, is available for any covered claim previously submitted to Level One within the applicable time limits.1⁰³ Under the program, the mediation is confidential and private, and the mediator has the ability to meet with the parties

97. CURRENT DRP POLICY, supra note 63, at 7. In an effort to tailor the Level One procedures in the most effective way, each business unit has created unique procedures. Id. For example, the packaging group currently utilizes a peer review process, which serves the functions of the Level One. Telephone Interview Richard R. Ross & Susan Brueggemann, supra note 37. From an administrative standpoint, each business group has a different tri-fold brochure highlighting the DRP. Id. The company, however, is moving away from separate materials for each group. Id.

98. ANHEUSER-BUSCH Cos., ANHEUSER-BUSCH DISPUTE RESOLUTION PROGRAM LEVEL ONE: LOCAL MANAGEMENT REVIEW (2007) [hereinafter Level One] (on file with authors). A full set of forms was developed from the outset of the program in order to ensure the formality and consistency of the DRP. Telephone Interview with Richard R. Ross & Susan Brueggemann, supra note 37.

99. CURRENT DRP POLICY, supra note 63, art. 1.1 at 7. The local HR manager is responsible for forwarding a copy of the form to the DRP Administrator. Id.

100. Level One, supra note 98. The form also confirms the employee's participation in the program with the following language: "I submit the above dispute to the Anheuser-Busch Dispute Resolution Program ("DRP") for resolution. I acknowledge and agree that if any covered claim is not resolved at Levels I or 2 and if I wish to pursue the matter further, I must request arbitration for resolution of such claim, and that the arbitration decision will be final and binding on both me and the Company." Id.

101. CURRENT DRP POLICY, supra note 63, art. 2.1 at 7.

102. Id. See supra Part IV.B as to which claims are "covered claims."

103. CURRENT DRP POLICY, supra note 63, at 8. In order to submit a covered claim to Level Two, "the dispute must have been submitted to Level One within 180 days of the date the dispute arose or before the expiration of the statute of limitations applicable to the alleged unlawful conduct or violation of law, whichever is longer." Id. at 6. The company describes mediation as

a process that seeks to find common ground for the voluntary settlement of covered claims. Mediation involves an attempt by the parties to resolve their disputes with the aid of a neutral third party not employed by the Company. The mediator's role is advisory. The mediator may offer suggestions and question the parties, but resolution of the dispute rests with the parties themselves.

Id. art. 1.1 at 8.

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